##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---



FORM 10-K



---



(Mark One)

|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2004.



or



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------



For the transition period from  to
.



Commission File Number 1-08180



---



TECO CAPITAL TRUST II

(Exact Name of Registrant as Specified in Its Charter)



---



|                                                                         |  |                                  
|------------------------------------------------------------------------ |  | ---------------------------------
|Delaware                                                                 |  | 13-4164852                       
|(State of Incorporation or Organization)                                 |  | (IRS Employer Identification No.)
|c/o The Bank of New York 101 Barclay Street, 8thFloor New York, New York |  | 10286                            
|(Address of Principal Executive Offices)                                 |  | (Zip Code)                       



Registrants
telephone number, including area code: (212) 815-5088



---



Securities registered pursuant to Section 12(b) of the Act:



|                    |  |                                          
|------------------- |  | -----------------------------------------
|Title of Each Class |  | Name of Each Exchange on Which Registered
|N/A                 |  | N/A                                      



Securities
registered pursuant to Section 12(g) of the Act:



N/A

(Title of Class)



---



Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.    x  Yes ̈No



Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  x



Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). ̈Yes    x  No



The aggregate market value of the registrants voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2004 was $0.



---



---

##### Table of Contents

PART I



ITEM 1. BUSINESS.



TECO Capital Trust II (the Trust) is a statutory business trust that TECO Funding Company II, LLC (the LLC), a subsidiary of TECO Energy, Inc. (TECO Energy), formed under Delaware
law on November 20, 2000 pursuant to a certificate of trust filed with the Delaware Secretary of State. The Trust is governed by an Amended and Restated Trust Agreement dated as of January 15, 2002 by and among the LLC as depositor, The Bank of New
York as property trustee, and The Bank of New York (Delaware) as Delaware trustee (the Trust Agreement). The Trust Agreement is qualified as an indenture under the Trust Indenture Act of 1939. TECO Energy and the Trust issued to the
public 17,965,000 mandatorily convertible adjustable conversion-rate equity security units with an annual distribution rate of 9.50%, with an aggregate liquidation amount of $449.1 million on January 15, 2002 for the purpose of acquiring related
company preferred securities from the LLC, which in turn purchased a corresponding amount of subordinated notes from TECO Energy. Each equity security unit initially consisted of a contract to purchase shares of common stock of TECO Energy and a
trust preferred security of the trust, which was pledged to secure the obligation to purchase the common stock of TECO Energy under the related purchase contracts.



Each trust preferred security has a stated liquidation amount of $25, on which distributions were payable at the rate of 5.11% per year on a
quarterly basis, in arrears, through October 15, 2004. In order to provide holders of equity security units comprised of trust preferred security and a purchase contract (each a normal unit) with the necessary collateral to be applied in
the settlement of their purchase contracts, a remarketing agent sold the trust preferred securities of the holders of normal units, other than those electing not to participate in the remarketing, and the remarketing agent used the proceeds to
purchase treasury securities, which the participating normal unitholders pledged to secure their obligations under the related purchase contracts. Holders of trust preferred securities who have substituted collateral for the trust preferred
securities that were part of the normal units and hold the trust preferred securities separately were permitted to participate in the remarketing.



In August 2004, TECO Energy completed the early settlement offer to exchange up to 17,865,000 of its previously outstanding 17,965,000 equity security units for 0.9509
shares of TECO Energy common stock plus $1.39 in cash for each validly tendered and accepted normal unit. The early settlement offer expired at midnight, New York City time, on August 24, 2004, and TECO Energy accepted all of the 10,756,073 equity
security units in the form of normal units tendered as of the expiration of the early settlement offer, or approximately 60.2% of the 17,865,000 normal units for which TECO Energy offered early settlement of the purchase contracts included therein.
In accordance with the terms of the early settlement offer, TECO Energy exchanged an aggregate of 10,227,746 shares of TECO Energy common stock and $14.9 million in cash, including cash paid in lieu of fractional shares, for the tendered equity
security units. As of December 31, 2004, there were 7,208,927 equity security units outstanding.



On October 12, 2004, $162.7 million aggregate stated liquidation amount of the Trusts trust preferred securities out of a total $180.2 million aggregate stated liquidation amount of such trust preferred
securities outstanding were remarketed, and the distribution rate on the trust preferred securities was reset in connection with the remarketing to 5.934% per annum, payable quarterly, effective on and after October 16, 2004. At the closing of the
remarketing on October 15, 2004, TECO Energy purchased $122.7 million aggregate stated liquidation amount of the trust preferred securities that were remarketed. TECO Energy has retired the trust preferred securities it purchased and, as a result,
the LLCs investment in the junior subordinated notes was reduced to $71.5 million. As of December 31, 2004, there were 2,300,000 junior subordinated notes outstanding.



2



---

##### Table of Contents

The trust preferred securities represent a corresponding amount of company preferred securities of the LLC. The LLC sold
company preferred securities to the Trust and company common securities to TECO Energy. The LLC used the proceeds from the sale of the company preferred securities and the company common securities to buy from TECO Energy a series of 5.11% junior
subordinated notes due January 15, 2007, with the same financial terms as the company preferred securities. TECO Energy has guaranteed payments to be made on the company preferred securities pursuant to a guarantee agreement. TECO Energy has
indirectly guaranteed payments to be made to the holders of the trust preferred securities as a result of their beneficial interest in the company preferred securities.



The cumulative cash distributions are subject to certain deferral provisions. TECO Energy can defer interest payments on the underlying
subordinated notes for up to five years, but not beyond the maturity date on the subordinated notes of January 15, 2007. If TECO Energy defers interest payments on the subordinated notes, the Trust will defer distributions on the trust preferred
securities. During any deferral period, distributions on the trust preferred securities will continue to accumulate quarterly at the initial annual rate of 5.11% of the stated liquidation amount through October 15, 2004 and at the reset rate
thereafter through January 15, 2007.



The Trust has minimal assets other than
the company preferred securities. The Trust Agreement does not permit the Trust to engage in any activities other than holding the company preferred securities, issuing the trust preferred securities, and engaging in other related activities. The
equity security units (of which the trust preferred securities are a component) began trading on the New York Stock Exchange on January 16, 2002 under the symbol TE PRU. As a result of the final settlement of the purchase contract
component of the units, the units ceased trading on the New York Stock Exchange before the opening of the market on January 14, 2005.



As long as the trust preferred securities remain outstanding, TECO Energy is required to maintain a 100 percent direct or indirect ownership in the company common
securities issued by the LLC. TECO Energy was in compliance with this covenant at December 31, 2004.



The fiscal year of the Trust is the calendar year. The LLC pays all fees and expenses related to the Trust.



ITEM 2. PROPERTIES.



The Trust has no physical property. Its primary assets are the company preferred securities issued by the LLC. The primary assets of the LLC are the junior subordinated debt securities issued by TECO Energy.



ITEM 3. LEGAL PROCEEDINGS.



The Trust is not a party to any legal proceedings.



ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.



No matters were submitted to a vote of security holders during the quarter ended December
31, 2004.



3



---

##### Table of Contents

PART II



ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.



The Trust has not issued common equity securities.



ITEM 6. SELECTED FINANCIAL DATA.



|                                                           |  |         |        |   |      |   |       |         |  |   |        |  
|---------------------------------------------------------- |  | ------- | ------ | - | ---- | - | ----- | ------- |  | - | ------ | -
|(millions)Year ended Dec. 31,                              |  | 2004(1) |        |   | 2003 |   |       | 2002(2) | 
|Repayment of Trust Preferred Securities  Early Settlement |  | $       | 268.9  |   |      | $ |      |         |  |   |       |  
|Repayment of Trust Preferred Securities  Remarketing      |  |         | 122.7  |   |      |   |      |         |  |   |       |  
|Jr. Subordinated Debt Securities Interest Income           |  |         | 16.2   |   |      |   |      |         |  |   |       |  
|Company Preferred Security Dividend Income                 |  |         |       |   |      |   | 23.0  |         |  |   | 22.0   |  
|Issuance of Trust Preferred Securities                     |  |         |       |   |      |   |      |         |  |   | 449.1  |  
|Retirement of Jr. Subordinated Debt Securities             |  |         | (391.6 | ) |      |   |      |         |  |   |       |  
|Trust Preferred Security Dividends                         |  |         | (15.5  | ) |      |   | (23.0 | )       |  |   | (22.0  | )
|Minority Interest Dividends                                |  |         | (0.7   | ) |      |   |      |         |  |   |       |  
|Purchase of Company Preferred Securities                   |  |         |       |   |      |   |      |         |  |   | (449.1 | )
|                                                           |  |         |        |   |      |   |       |         |  |   |        |  
|Changes in Net Assets Available for Trust Activities       |  | $       |       |   |      | $ |      |         |  | $ |       |  
|                                                           |  |         |        |   |      |   |       |         |  |   |        |  
|Dividends Receivable                                       |  | $       | 0.9    |   |      | $ | 4.8   |         |  | $ | 4.8    |  
|Investment in Jr. Subordinated Debt Securities             |  |         | 71.5   |   |      |   |      |         |  |   |       |  
|Investment in Company Preferred Securities                 |  |         |       |   |      |   | 449.1 |         |  |   | 449.1  |  
|                                                           |  |         |       
|Trust Preferred Securities Dividends Payable               |  |         | 0.7    |   |      |   | 4.8   |         |  |   | 4.8    |  
|Minority Interest Dividends Payable                        |  |         | 0.2    |   |      |   |      |         |  |   |       |  
|Trust Preferred Securities                                 |  |         | 57.5   |   |      |   | 449.1 |         |  |   | 449.1  |  
|Minority Interest                                          |  |         | 14.0   |   |      |   |      |         |  |   |       |  
|                                                           |  |         |        |   |      |   |       |         |  |   |        |  
|Net Assets Available for Trust Activities                  |  | $       |       |   |      | $ |      |         |  | $ |       |  
|                                                           |  |         |        |   |      |   |       |         |  |   |        |  

---

|(1) | Reflects the consolidation of the LLC by the Trust effective January 1, 2004 in accordance with FIN 46. For more information on the consolidation of the LLC, see Note B of
Notes to Financial Statements.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | The Trust was established on November 20, 2000 and commenced operations on January 15, 2002.
|--- | --------------------------------------------------------------------------------------------



ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION FOR THE YEAR ENDED DECEMBER 31, 2004.



TECO Capital Trust II was formed on November 20, 2000 and issued to the
public 17,965,000 of its trust preferred securities as components of equity security units issued by TECO Energy, Inc. (TECO Energy) and the Trust for an aggregate purchase price of $449,125,000 on January 15, 2002. The proceeds from the
issuance were remitted to TECO Funding Company II, LLC (the LLC) in exchange for 17,965,000 company preferred securities for an aggregate purchase price of $449,125,000. TECO Energy purchased all of the company common securities of the
LLC for an aggregate purchase price of $13,975,000. The LLC remitted the proceeds from the issuance of both its company common securities and company preferred securities to TECO Energy in exchange for $463,100,000 aggregate principal amount of
5.11% Junior Subordinated Notes Due 2007 of TECO Energy, dated January 15, 2002, and bearing interest and maturing on the dates and in the amounts set forth in the Indenture, dated as of August 17, 1998, by and between TECO Energy and The Bank of
New York, as Trustee, as supplemented by the Sixth Supplemental Indenture, dated as of January 15, 2002.



4



---

##### Table of Contents

In August 2004, TECO Energy completed the early settlement offer to exchange up to 17,865,000 of its previously
outstanding 17,965,000 equity security units for 0.9509 shares of TECO Energy common stock plus $1.39 in cash for each validly tendered and accepted normal unit. The early settlement offer expired at midnight, New York City time, on August 24, 2004,
and TECO Energy accepted all of the 10,756,073 equity security units in the form of normal units tendered as of the expiration of the early settlement offer, or approximately 60.2% of the 17,865,000 normal units for which TECO Energy offered early
settlement of the purchase contracts included therein. In accordance with the terms of the early settlement offer, TECO Energy exchanged an aggregate of 10,227,746 shares of TECO Energy common stock and $14.9 million in cash, including cash paid in
lieu of fractional shares, for the tendered equity security units. As of December 31, 2004, there were 7,208,927 equity security units outstanding.



On October 12, 2004, $162.7 million aggregate stated liquidation amount of the Trusts trust preferred securities out of a total $180.2 million aggregate stated
liquidation amount of such trust preferred securities outstanding were remarketed, and the distribution rate on the trust preferred securities was reset in connection with the remarketing to 5.934% per annum, payable quarterly, effective on and
after October 16, 2004. At the closing of the remarketing on October 15, 2004, TECO Energy purchased $122.7 million aggregate stated liquidation amount of the trust preferred securities that were remarketed. TECO Energy has retired the trust
preferred securities it purchased and, as a result, the LLCs investment in the junior subordinated notes was reduced to $71.5 million. As of December 31, 2004, there were 2,300,000 junior subordinated notes outstanding.



On January 14, 2005, the final settlement rate for TECO Energys remaining outstanding
7,208,927 equity security units (units) that were not tendered in the early settlement offer completed in August 2004 was set based on the average trading price of TECO Energy common stock from the 20 consecutive trading days ending
January 12, 2005, as required under the terms of the units. As a result of the final settlement of the purchase contract component of the units, the units ceased trading on the NYSE before the opening of the market on January 14, 2005. On January
18, 2005, each holder of the TECO Energy units purchased from TECO Energy 0.9509 shares of TECO Energy common stock per unit for $25 per share. The cash for the unit holders purchase obligation was satisfied from the proceeds received upon the
maturity of a portfolio of U.S. Treasury securities acquired in connection with the October 2004 remarketing of the trust preferred securities of the Trust. As a result, TECO Energy issued 6.85 million shares of common stock on January 18, 2005 and
received approximately $180 million of proceeds from the settlement.



On
January 17, 2003, the FASB issued FIN 46, Consolidation of Variable Interest Entities, an interpretation of ARB No. 51, which imposes a new approach in determining if a reporting entity should consolidate certain legal entities, including
partnerships, limited liability companies, or trusts, among others, collectively defined as variable interest entities or VIEs. On December 24, 2003, the FASB published a revision to FIN 46 (FIN 46R), to clarify some of the provisions of FIN 46 and
exempt certain legal entities from its requirements.



Under FIN 46R, a legal
entity is considered a VIE, with some exemptions if specific criteria are met, if it does not have sufficient equity at risk to finance its own activities without relying on financial support from other parties. Additional criteria must be applied
to determine if this condition is met or if the equity holders, as a group, lack any one of three stipulated characteristics of a controlling financial interest. If the legal entity is a VIE, then the reporting entity determined to be the primary
beneficiary of the VIE must consolidate it. Even if a reporting entity is not obligated to consolidate a VIE, then certain disclosures must be made about the VIE if the reporting entity has a significant variable interest. The Trust adopted the
provisions of FIN 46R as of January 1, 2004.



5



---

##### Table of Contents

The LLC is considered a VIE in accordance with FIN 46R. In accordance with the guidance under FIN 46R, the Trust
consolidated the LLC. Likewise, TECO Energy deconsolidated the LLC as of January 1, 2004. As of December 31, 2004 and for the twelve-month period ended December 31, 2004, the financial statements of the Trust include the consolidated net assets and
reflect the changes in consolidated net assets of the LLC and all inter-company/trust transactions have been eliminated. The financial statements of the Trust as of December 31, 2003 and for the twelve-month periods ended December 31, 2003 and 2002
have not been restated to reflect the consolidation of the LLC. The cumulative effect of the adoption of FIN 46R was to recognize the cash on hand at the LLC as of January 1, 2004.



The trust preferred securities represent undivided beneficial interests in the assets of the Trust, which on a consolidated basis consist of
a corresponding amount of the company preferred securities. Distributions on the company preferred securities are passed on to the holders of the trust preferred securities. The Trust is required to make distributions on the trust preferred
securities concurrently with, and in the same amount as, the distributions on the company preferred securities. Distributions on the company preferred securities are cumulative and accumulate from the date they are first issued at the annual rate of
5.11% of the $25 per company preferred security liquidation preference. Distributions are payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year. Distributions accrued on the company preferred securities at
December 31, 2003 and 2004, together with the amounts accrued during the periods January 1 through January 15 of 2004 and 2005, respectively, were subsequently distributed by the Trust to the holders of the trust preferred securities.



The equity security units (of which the trust preferred securities were a component) began
trading on the New York Stock Exchange on January 16, 2002 under the symbol TE PRU. As a result of the final settlement of the purchase contract component of the units, the units ceased trading on the New York Stock Exchange before the
opening of the market on January 14, 2005.



TECO Energy owns all of the company
common securities of the LLC, which, unless an event of default has occurred and is continuing with respect to the junior subordinated notes, represent 100 percent of the voting rights in the LLC. The LLC is managed by a board of directors who are
designated as managers of the LLC within the meaning of Delaware law. The directors will serve until their successors are duly elected and qualified. The directors may appoint officers of the limited liability company from time to time
to manage the day-to-day affairs of the limited liability company. All voting rights in the LLC are vested in TECO Energy as the sole holder of the company common securities, including the right to elect the board of directors.



Liquidity and Capital Resources:



Because the Trust is a special purpose financing entity with no separate business operations
and minimal assets other than the company preferred securities, the Trusts ability to pay distributions on the trust preferred securities depends on the ability of the LLC to pay distributions on the company preferred securities, which in turn
depends on the LLCs receipt of payments from TECO Energy. Accordingly, an evaluation of TECO Energys financial condition is relevant to an evaluation of the financial condition of the Trust and its ability to pay distributions on the
trust preferred securities, and the Trust refers you to the information about TECO Energy, including financial statements and other financial information, included in TECO Energys Quarterly Reports on Form 10-Q for the quarters ended March 31,
2004, June 30, 2004 and September 30, 2004, its Annual Report on Form 10-K for the year ended December 31, 2004, and its Current Reports on Form 8-K as filed with the Securities and Exchange Commission, copies of which may be obtained from the
Director of Investor Relations at TECO Energy, Inc., 702 North Franklin Street, Tampa, Florida 33602 or from its website at www.tecoenergy.com.



Contractual Obligations:



Contractual obligations of the Trust consist only of repayment of the principal amount of trust preferred securities ($57.5 million at December 31, 2004) due on January
15, 2007 and annual dividends of approximately $3.4 million.



6



---

##### Table of Contents

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.



On January 15, 2002, the LLC purchased junior subordinated notes from TECO Energy with an
annual interest rate of 5.11% for an aggregate purchase price of $463,100,000 and issued company common securities to TECO Energy in an aggregate amount of $13,975,000. In August 2004, TECO Energy completed an early settlement offer for the equity
security units, as a result of which the LLCs investment in the junior subordinated notes was reduced to $194,198,175. In October 2004, the Trusts preferred securities were remarketed and the distribution rate on the trust preferred
securities was reset to 5.934% per annum, payable quarterly, effective on and after October 16, 2004. At the closing of the remarketing on October 15, 2004, TECO Energy purchased $122,723,175 aggregate stated liquidation amount of the trust
preferred securities that were remarketed. TECO Energy has retired the trust preferred securities it purchased and, as a result, the LLCs investment in the junior subordinated notes has been reduced to $71,475,000. TECO Energy has guaranteed
all payments to be made on the company preferred securities. There is no public market for these company preferred securities, the junior subordinated notes or the company common securities.



7



---

##### Table of Contents

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.



INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



|                                                                                                                       |  |         
|---------------------------------------------------------------------------------------------------------------------- |  | --------
|                                                                                                                       |  | Page No.
|Report of Independent Registered Certified Public Accounting Firm                                                      |  | 9       
|                                                                                                                       | 
|Statement of Net Assets Available for Trust Activities, December 31, 2004 and 2003                                     |  | 10      
|                                                                                                                       | 
|Statement of Changes in Net Assets Available for Trust Activities For the years ended December 31, 2004, 2003 and 2002 |  | 11      
|                                                                                                                       | 
|Notes to Financial Statements                                                                                          |  | 12-14   



All financial
statement schedules have been omitted since they are not required, are inapplicable or the required information is presented in the financial statements or notes thereto.



8



---

##### Table of Contents

Report of Independent Registered Certified Public Accounting Firm



To the Trustees of the TECO Capital Trust II:



In our opinion, the financial statements listed in the accompanying index present fairly, in all material respects, the net assets available for trust activities of the TECO Capital Trust II (the Trust) at December 31, 2004 and
2003, and the changes in net assets available for trust activities for the years ended December 31, 2004, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the
responsibility of the Trusts management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.



/s/
PricewaterhouseCoopers LLP



Tampa, Florida

March 21, 2005



9



---

##### Table of Contents

TECO CAPITAL TRUST II



STATEMENT
OF NET ASSETS AVAILABLE FOR TRUST ACTIVITIES



|                                                |  |              |            |      |   |            
|----------------------------------------------- |  | ------------ | ---------- | ---- | - | -----------
|                                                |  | December 31,
|                                                |  | 2004         |            | 2003
|Assets                                          |  |              |            |      |   |            
|Cash                                            |  | $            | 9,657      |      | $ |           
|Interest Receivable  Jr. Subordinated Debt     |  |              | 883,610    |      |   |           
|Dividends Receivable  Co. Preferred Securities |  |              |           |      |   | 4,781,310  
|Investment in Jr. Subordinated Debt Securities  |  |              | 71,475,000 |      |   |           
|Investment in Company Preferred Securities      |  |              |           |      |   | 449,125,000
|                                                |  |              |            |      |   |            
|Total Assets                                    |  |              | 72,368,267 |      |   | 453,906,310
|                                                |  |              |            |      |   |            
|Liabilities                                     |  |              |            |      |   |            
|Trust Preferred Securities Dividends Payable    |  |              | 710,844    |      |   | 4,781,310  
|Minority Interest Dividends Payable             |  |              | 172,766    |      |   |           
|Trust Preferred Securities                      |  |              | 57,500,000 |      |   | 449,125,000
|Minority Interest                               |  |              | 13,975,000 |      |   |           
|                                                |  |              |            |      |   |            
|Total Liabilities                               |  |              | 72,358,610 |      |   | 453,906,310
|                                                |  |              |            |      |   |            
|Net assets available for trust activities       |  | $            | 9,657      |      | $ |           
|                                                |  |              |            |      |   |            



The accompanying notes
are an integral part of the financial statements



10



---

##### Table of Contents

TECO CAPITAL TRUST II



STATEMENT
OF CHANGES IN NET ASSETS AVAILABLE FOR TRUST ACTIVITIES



|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|---------------------------------------------------------- |  | ------------------------ | ------------ | - | ------------------------ | - | ----------- | ------------------------ |  | - | ------------ | -
|                                                           |  | Year ended Dec. 31, 2004 |              |   | Year ended Dec. 31, 2003 |   |             | Year ended Dec. 31, 2002 | 
|Additions to net assets attributed to:                     |  |                          |              |   |                          |   |             |                          |  |   |              |  
|Repayment of Trust Preferred Securities  Early Settlement |  | $                        | 268,901,825  |   |                          | $ |            |                          |  | $ |             |  
|Repayment of Trust Preferred Securities  Remarketing      |  |                          | 122,723,175  |   |                          |   |            |                          |  |   |             |  
|Jr. Subordinated Debt Securities Interest Income           |  |                          | 16,182,713   |   |                          |   |            |                          |  |   |             |  
|Company Preferred Security Dividend Income                 |  |                          |             |   |                          |   | 22,950,288  |                          |  |   | 21,994,026   |  
|Issue of Trust Preferred Securities                        |  |                          |             |   |                          |   |            |                          |  |   | 449,125,000  |  
|Interest Income  Money Market Fund                        |  |                          | 2,716        |   |                          |   |            |                          |  |   |             |  
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|                                                           |  |                          | 407,810,429  |   |                          |   | 22,950,288  |                          |  |   | 471,119,026  |  
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|Deductions from net assets attributed to:                  |  |                          |              |   |                          |   |             |                          |  |   |              |  
|Retirement of Jr. Subordinated Debt Securities             |  |                          | (391,625,000 | ) |                          |   |            |                          |  |   |             |  
|Trust Preferred Securities Dividends                       |  |                          | (15,444,600  | ) |                          |   | (22,950,288 | )                        |  |   | (21,994,026  | )
|Minority Interest Dividends                                |  |                          | (738,113     | ) |                          |   |            |                          |  |   |             |  
|Investment in Company Preferred Securities                 |  |                          |             |   |                          |   |            |                          |  |   | (449,125,000 | )
|Administrative and General Expenses                        |  |                          | (5,170       | ) |                          |   |            |                          |  |   |             |  
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|                                                           |  |                          | (407,812,883 | ) |                          |   | (22,950,288 | )                        |  |   | (471,119,026 | )
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|Changes in net assets available for trust activities       |  |                          | (2,454       | ) |                          |   |            |                          |  |   |             |  
|Cumulative Effect of Change in Accounting Principle        |  |                          | 12,111       |   |                          |   |            |                          |  |   |             |  
|Net assets available for trust activities:                 |  |                          |              |   |                          |   |             |                          |  |   |              |  
|Beginning of year                                          |  |                          |             |   |                          |   |            |                          |  |   |             |  
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  
|End of year                                                |  | $                        | 9,657        |   |                          | $ |            |                          |  | $ |             |  
|                                                           |  |                          |              |   |                          |   |             |                          |  |   |              |  



The accompanying notes
are an integral part of the financial statements



11



---

##### Table of Contents

NOTES TO FINANCIAL STATEMENTS



A. OVERVIEW



TECO Capital Trust II (the Trust) is a
statutory business trust that TECO Funding Company II, LLC (the LLC), a subsidiary of TECO Energy, Inc. (TECO Energy), formed under Delaware law on November 20, 2000 pursuant to a certificate of trust filed with the Delaware
Secretary of State. The Trust is governed by an Amended and Restated Trust Agreement dated as of January 15, 2002 by and among the LLC as depositor, The Bank of New York as property trustee, and The Bank of New York (Delaware) as Delaware trustee
(the Trust Agreement). The Trust Agreement is qualified as an indenture under the Trust Indenture Act of 1939. TECO Energy and the Trust issued to the public 17,965,000 mandatorily convertible adjustable conversion-rate equity security
units with an annual distribution rate of 9.50%, with an aggregate liquidation amount of $449.1 million on January 15, 2002 for the purpose of acquiring related company preferred securities from the LLC, which in turn purchased a corresponding
amount of subordinated notes from TECO Energy. Each equity security unit initially consisted of a contract to purchase shares of common stock of TECO Energy and a trust preferred security of the trust, which was pledged to secure the obligation to
purchase the common stock of TECO Energy under the related purchase contracts.



In August 2004, TECO Energy completed the early settlement offer to exchange up to 17,865,000 of its previously outstanding 17,965,000 equity security units for 0.9509 shares of TECO Energy common stock plus $1.39 in
cash for each validly tendered and accepted normal unit. The early settlement offer expired at midnight, New York City time, on August 24, 2004, and TECO Energy accepted all of the 10,756,073 equity security units in the form of normal units
tendered as of the expiration of the early settlement offer, or approximately 60.2% of the 17,865,000 normal units for which TECO Energy offered early settlement of the purchase contracts included therein. In accordance with the terms of the early
settlement offer, TECO Energy exchanged an aggregate of 10,227,746 shares of TECO Energy common stock and $14.9 million in cash, including cash paid in lieu of fractional shares, for the tendered equity security units. As of December 31, 2004, there
were 7,208,927 equity security units outstanding.



On October
12, 2004, $162.7 million aggregate stated liquidation amount of the Trusts trust preferred securities out of a total $180.2 million aggregate stated liquidation amount of such trust preferred securities outstanding were remarketed, and the
distribution rate on the trust preferred securities was reset in connection with the remarketing to 5.934% per annum, payable quarterly, effective on and after October 16, 2004. At the closing of the remarketing on October 15, 2004, TECO Energy
purchased $122.7 million aggregate stated liquidation amount of the trust preferred securities that were remarketed. TECO Energy has retired the trust preferred securities it purchased and, as a result, the LLCs investment in the junior
subordinated notes has been reduced to $71.5 million. As of December 31, 2004, there were 2,300,000 junior subordinated notes outstanding and the trust preferred securities had a carrying amount of $57.5 million, and an estimated fair market value
of $58.6 million. The estimated fair market value was based on quoted market prices on the same or similar issues.



Each trust preferred security has a stated liquidation amount of $25, on which distributions were payable at the rate of 5.11% per year on a quarterly
basis, in arrears, through October 15, 2004. In order to provide holders of equity security units comprised of trust preferred security and a purchase contract (each a normal unit) with the necessary collateral to be applied in the
settlement of their purchase contracts, a remarketing agent sold the trust preferred securities of the holders of normal units, other than those electing not to participate in the remarketing, and the remarketing agent used the proceeds to purchase
treasury securities, which the participating normal unitholders pledged to secure their obligations under the related purchase contracts. Holders of trust preferred securities who had substituted collateral for the trust preferred securities that
were part of the normal units and held the trust preferred securities separately were permitted to participate in the remarketing.



12



---

##### Table of Contents

The trust preferred securities represent a corresponding amount of company preferred securities of the
LLC. The LLC sold company preferred securities to the Trust and company common securities to TECO Energy. The LLC used the proceeds from the sale of the company preferred securities and the company common securities to buy from TECO Energy a series
of 5.11% junior subordinated notes due January 15, 2007, with the same financial terms as the company preferred securities. TECO Energy has guaranteed payments to be made on the company preferred securities pursuant to a guarantee agreement. TECO
Energy has indirectly guaranteed payments to be made to the holders of the trust preferred securities as a result of their beneficial interest in the company preferred securities.



The cumulative cash distributions are subject to certain deferral provisions. TECO Energy can defer interest payments on the
underlying subordinated notes for up to five years, but not beyond the maturity date on the subordinated notes of January 15, 2007. If TECO Energy defers interest payments on the subordinated notes, the Trust will defer distributions on the trust
preferred securities. During any deferral period, distributions on the trust preferred securities will continue to accumulate quarterly at the initial annual rate of 5.11% of the stated liquidation amount through October 15, 2004 and at the reset
rate thereafter through January 15, 2007.



The Trust has
minimal assets other than the company preferred securities. The Trust Agreement does not permit the Trust to engage in any activities other than holding the company preferred securities, issuing the trust preferred securities, and engaging in other
related activities. The equity security units (of which the trust preferred securities are a component) began trading on the New York Stock Exchange on January 16, 2002 under the symbol TE PRU. As a result of the final settlement of the
purchase contract component of the units, the units ceased trading on the New York Stock Exchange before the opening of the market on January 14, 2005.



As long as the trust preferred securities remain outstanding, TECO Energy is required to maintain a 100 percent direct or indirect ownership in the
company common securities issued by the LLC. TECO Energy was in compliance with this covenant at December 31, 2004.



B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



BASIS OF PRESENTATION



Additions to net assets, including dividend income, and deductions from net assets, including dividend distributions, are recognized on an accrual basis.
Dividend distributions accumulated from the date the Trust issued the trust preferred securities and are payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year, beginning April 15, 2002.



On January 17, 2003, the FASB issued FIN 46, Consolidation of Variable
Interest Entities, an interpretation of ARB No. 51, which imposes a new approach in determining if a reporting entity should consolidate certain legal entities, including partnerships, limited liability companies, or trusts, among others,
collectively defined as variable interest entities or VIEs. On December 24, 2003, the FASB published a revision to FIN 46 (FIN 46R), to clarify some of the provisions of FIN 46 and exempt certain legal entities from its requirements.



Under FIN 46R, a legal entity is considered a VIE, with some exemptions if
specific criteria are met, if it does not have sufficient equity at risk to finance its own activities without relying on financial support from other parties. Additional criteria must be applied to determine if this condition is met or if the
equity holders, as a group, lack any one of three stipulated characteristics of a controlling financial interest. If the legal entity is a VIE, then the reporting entity determined to be the primary beneficiary of the VIE must consolidate it. Even
if a reporting entity is not obligated to consolidate a VIE, then certain disclosures must be made about the VIE if the reporting entity has a significant variable interest. The Trust adopted the provisions of FIN 46R as of January 1, 2004.



13



---

##### Table of Contents

In November 2000, TECO Energy established TECO Funding Company II, LLC (the LLC). This limited-liability
company is a wholly-owned subsidiary of TECO Energy. This LLC sold preferred securities to the Trust. The LLC used the proceeds to purchase subordinated notes from TECO Energy. The subordinated notes are not secured by specific assets of TECO
Energy. The terms of these notes are similar to the terms of the preferred securities. The LLC is considered a VIE in accordance with FIN 46R. In accordance with the guidance under FIN 46R, the Trust consolidated the LLC. Likewise, TECO Energy
deconsolidated the LLC as of January 1, 2004. As of December 31, 2004 and for the twelve-month period ended December 31, 2004, the financial statements of the Trust include the consolidated net assets and reflect the changes in consolidated net
assets of the LLC and all inter-company/trust transactions have been eliminated. The financial statements of the Trust as of December 31, 2003 and for the twelve-month periods ended December 31, 2003 and 2002 have not been restated to reflect the
consolidation of the LLC. The cumulative effect of the adoption of FIN 46R was to recognize the cash on hand at the LLC as of January 1, 2004.



INCOME TAXES



The Trust is characterized for United States federal income tax purposes as a grantor trust and will not be taxed as a corporation. For income tax purposes, any income or losses from the Trust are passed through to
the holders of the trust preferred securities. Therefore, no provision for income taxes has been included in the Trusts financial statements.



C. RELATED PARTIES



During the years ended 2004 and 2003, the LLC recognized and received interest income on the junior subordinated notes from TECO Energy of $16,182,713 and
$23,664,410, respectively. The LLC also paid dividends on the company common securities of $738,113 and $714,122 to TECO Energy during 2004 and 2003, respectively. TECO Energy is the sole minority interest shareholder of the LLC, as discussed in
Note B.



During the years ended 2004 and 2003, the Trust
recognized dividend income on the company preferred securities from the LLC of $15,444,600 and $22,950,288, respectively. The Trust also received dividend payments from the LLC during the years ended 2004 and 2003 of $15,444,600 and $22,950,288,
respectively.



D. SUBSEQUENT EVENT



On Jan. 14, 2005, the final settlement rate for TECO Energys remaining
outstanding 7,208,927 equity security units (units) (NYSE: TE-PRU) that were not tendered in the early settlement offer completed in August 2004 was set based on the average trading price of TECO Energy common stock from the 20
consecutive trading days ending Jan. 12, 2005, as required under the terms of the units. As a result of the final settlement of the purchase contract component of the units, the units ceased trading on the NYSE before the opening of the market on
Jan. 14, 2005. On Jan. 18, 2005, each holder of the TECO Energy units purchased from TECO Energy 0.9509 shares of TECO Energy common stock per unit for $25 per share. The cash for the unit holders purchase obligation was satisfied from the
proceeds received upon the maturity of a portfolio of U.S. Treasury securities acquired in connection with the October 2004 remarketing of the trust preferred securities of the Trust. As a result, TECO Energy issued 6.85 million shares of common
stock on Jan. 18, 2005 and received approximately $180 million of proceeds from the settlement.



14



---

##### Table of Contents

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.



During the period Jan. 1, 2003 to the date of this report, neither TECO
Energy nor TECO Capital Trust II has had or has filed with the Commission a report as to any changes in or disagreements with accountants on accounting principles or practices, financial statement disclosure, or auditing scope or procedure.



ITEM 9A. CONTROLS AND PROCEDURES.



Conclusions Regarding Effectiveness of Disclosure Controls and Procedures.



TECO Energy, Inc. (the Company) is designated to make
compliance filings on behalf of the Trust. The Companys management, with the participation of its principal executive officer and principal financial officer, has evaluated the effectiveness of the Trusts disclosure controls and
procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this annual report (the Evaluation Date).
Based on such evaluation, the principal executive officer and principal financial officer have concluded that, as of the Evaluation Date, the Trusts disclosure controls and procedures are effective and designed to ensure that the information
relating to the Trust required to be disclosed in the Trusts reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods.



Changes in Internal Control over Financial Reporting.



There was no change in the Trusts internal control over financial
reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of the Trusts internal controls that occurred during the Trusts last fiscal quarter that has materially affected,
or is reasonably likely to materially affect, such controls.



ITEM 9B. OTHER
INFORMATION.



None.



15



---

##### Table of Contents

PART III



ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.



The Bank of New York (Delaware), a Delaware banking corporation, acts as the Delaware Trustee, pursuant to the certificate of trust that formed the Trust in November
2000. The Trust has no executive officers or directors.



ITEM 11. EXECUTIVE
COMPENSATION.



Not applicable.



ITEM 12. SECURITY OWNERSHIP OF BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS.



Not applicable.



ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.



Not applicable.



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.



The LLC pays all fees and expenses related to the Trust including audit fees. The following table presents fees for professional audit
services rendered by PricewaterhouseCoopers LLP for the audit of the Trusts annual financial statements for the years ended December 31, 2004 and December 31, 2003.



|                   |  |      |        |      |   |       
|------------------ |  | ---- | ------ | ---- | - | ------
|                   |  | 2004 |        | 2003
|Audit fees         |  | $    | 25,000 |      | $ | 24,050
|Audit-related fees |  |      |       |      |   |      
|Tax fees           |  |      |       |      |   |      
|All other fees     |  |      |       |      |   |      
|                   |  |      |        |      |   |       
|Total              |  | $    | 25,000 |      | $ | 24,050
|                   |  |      |        |      |   |       



Audit fees consist of professional
services for the audit of the Trusts annual financial statements and review of financial statements included in the Trusts 10-Q filings.



16



---

##### Table of Contents

PART IV



ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.



|(a) | Certain documents filed as part of this report.
|--- | -----------------------------------------------



| | 1. | Financial Statements
| | -- | --------------------



The financial statements are listed under Item 8 of this report.



| | 2. | Financial Statement Schedules
| | -- | -----------------------------



None



| | 3. | Exhibits  See index on page 19
| | -- | -------------------------------



|(b) | The exhibits filed as part of this Form 10-K are listed on the Exhibit Index immediately preceding such Exhibits. The Exhibit Index is incorporated herein by reference.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



17



---

##### Table of Contents

SIGNATURE



Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.



|                     |  |  |  |                                                |  |                            
|-------------------- |  |  |  | ---------------------------------------------- |  | ---------------------------
|                     |  |  |  | TECO CAPITAL TRUST II                         
|                     |  | 
|                     |  |  |  | By: TECO Energy, Inc., as designated
signatory
|                     |  |  | 
|Date: March 30, 2005 |  |  |  | By:                                            |  | /s/ Gordon L. Gillette     
|                     |  |  |  | Name:                                          |  | Gordon L. Gillette         
|                     |  |  |  | Title:                                         |  | Principal Financial Officer



18



---

##### Table of Contents

EXHIBIT INDEX



|     |  |                                                                                                                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3    |  | Amended and Restated Trust Agreement of TECO Capital Trust II dated as of January 15, 2002.(1)                                                                                                                                                                                                          
|     | 
|4.1  |  | Certificate representing Trust Preferred Securities issued by TECO Capital Trust II.(1)                                                                                                                                                                                                                 
|     | 
|4.2  |  | Amended and Restated Limited Liability Agreement of TECO Funding Company II, LLC dated as of January 15, 2002.(1)                                                                                                                                                                                       
|     | 
|4.3  |  | Certificate representing Company Preferred Securities issued by TECO Funding Company II, LLC.(1)                                                                                                                                                                                                        
|     | 
|4.4  |  | Indenture dated as of August 17, 1998 between TECO Energy, Inc. and The Bank of New York, as trustee.(2)                                                                                                                                                                                                
|     | 
|4.5  |  | Sixth Supplemental Indenture dated as of January 15, 2002 by and between TECO Energy, Inc. and The Bank of New York.(1)                                                                                                                                                                                 
|     | 
|4.6  |  | Guarantee Agreement dated as of January 15, 2002 by and between TECO Energy, Inc. as Guarantor and The Bank of New York.(1)                                                                                                                                                                             
|     | 
|4.7  |  | 5.11% Junior Subordinated Notes due January 15, 2007.(1)                                                                                                                                                                                                                                                
|     | 
|23.1 |  | Consent of Independent Certified Public Accountants. Filed herewith.                                                                                                                                                                                                                                    
|     | 
|31.1 |  | Certification of the Chief Executive Officer of TECO Energy, Inc. pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.                                                                                               
|     | 
|31.2 |  | Certification of the Chief Financial Officer of TECO Energy, Inc. pursuant to Securities Exchange Act Rules 13a-15(e) and 15d-15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002                                                                                                
|     | 
|32   |  | Certification by Chief Executive Officer and Chief Financial Officer of TECO Energy, Inc. of Periodic Financial Report Pursuant to 18 U.S.C. Section 1350.                                                                                                                                              
|     | 
|99.1 |  | The consolidated financial statements of TECO Energy, Inc. and its subsidiaries included in Item 8 of TECO Energy, Inc.s Annual Report on Form 10-K. Filed as Item 8 to TECO Energy, Inc.s Annual Report on Form 10-K filed on March 15, 2005 (File No.
1-08180) and incorporated herein by reference.

---

|(1) | Incorporated by reference to the identically titled exhibit to the Current Report on Form 8-K (File No. 1-08180) filed by TECO Energy, Inc. on January 15, 2002.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Incorporated by reference to Exhibit 4 to TECO Energy, Inc.s Amendment No. 1 to Registration Statement on Form S-3 (No. 333-60819) filed with the Commission on
August 24, 1998.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



19